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TUESDAY, 12 JULY 2011 18:19 PAUL ANTHONY A. ISLA WITH BLOOMBERG NEWS
THE energy unit of San Miguel Corp. (SMC) plans to raise $500 million in the country’s third-largest initial public offering (IPO) that may help fund purchases of power plants and production contracts the government is selling to pay off debts.
SMC Global Power Holdings Corp. (SMGPHC) will sell the shares later this year, SMC said in a stock exchange filing, without disclosing terms.
The Philippines’ largest listed company is expanding into energy and infrastructure after setting a goal to boost return on equity to triple the 7-percent level it has earned from its mainstay beer, food and drinks business. SMC Global, which has said it intends to double generation capacity in five years, announced the share sale after the benchmark Philippine Stock Exchange Index rose to a record last week.
“This is a huge IPO,” said Rico Gomez, who helps manage $1.5 billion at Rizal Commercial Banking Corp. “The company is in an attractive industry as certain parts of the country have a shortage” of electric power, he said.
As this develop, SMGPHC said it will continue to participate in the government’s privatization of the remaining generation assets and contracted capacities of the National Power Corp. Alan Ortiz, company president and chief operating officer, told reporters.
“We’re joining the bid of all the remaining generating assets and contracted capacities. The chance of winning is very slim considering competition so we need to bid for all of them,” the SMGHPC official pointed out.
Ortiz said they will not breach the market cap even if they win in the bid for the Unified Leyte. “We have no exposure in the Visayas, while the others are still ahead of us [in terms of market cap]. But we will bid and that’s as far as I can say,” he added.
The Power Sector Assets and Liabilities Management Corp. issued the invitation to bid to interested parties to participate in and bid for the appointment as the independent power producer administrator for the contracted capacity of the Naga power plant complex.
The Naga complex is composed of the 106.8-megawatt (MW) Cebu thermal power plant, 39-MW Cebu diesel power plant situated in Naga, Cebu. Interested parties must submit a letter of interest to the committee not later than 5pm on July 22. The pre-bid conference is on August 12 while the bid submission date has been set on October 10.
Under the Electric Power Industry Reform Act, power generators are allowed to limited to have a maximum market share of 30 percent for the grid and 25 percent of the national installed capacity to ensure there will be enough competition among industry players.
(Paul Anthony A. Isla with Bloomberg News)
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